A page-turning, true-crime exposé of the subprime salesmen and Wall Street alchemists who produced the biggest financial scandal in American history "It's hard to have a guilty conscience if you don't have a conscience. Anything that benefited production - that benefited me and benefited my wallet - I'd do it." The sales force at Ameriquest Mortgage took this philosophy to heart. They watched the Hollywood white-collar-crime flick "Boiler Room" as a training tape, studying how to pitch overpriced deals to unsuspecting home owners. They learned how to forge signatures on mortgage paperwork and create fake documents in "cut-and-paste" operations they dubbed "The Lab" or "The Art Department." In this stunning narrative, award-winning reporter Michael W. Hudson reveals the story of the rise and fall of the subprime mortgage business by chronicling the rise and fall of two corporate empires: Ameriquest and Lehman Brothers. As the biggest subprime lender and Wall Street's biggest patron of subprime, Ameriquest and Lehman did more than any other institutions to create the feeding frenzy that emboldened mortgage pros to flood the nation with high-risk, high-profit home loans. It's a tale populated by a remarkable cast of the characters: a shadowy billionaire who created the subprime industry out of the ashes of the 1980s S&L scandal; Wall Street executives with an insatiable desire for product; struggling home owners ensnared in the most ingenious of traps; lawyers and investigators who tried to expose the fraud; politicians and bureaucrats who turned a blind eye; and, most of all, the drug-snorting, high-living salesmen who tell all about the money they made, the lies they told, the deals they closed. Provocative and gripping, The Monster is a searing exposé of the bottom-feeding fraud and top-down greed that fueled the financial collapse.
Before the housing crisis erupted in late 2007, there was a decade-long period of subprime lending targeted at the most vulnerable members of society. The elderly, those facing financial difficulties, and families in transition were forced to pay significantly higher borrowing costs to compensate for their poor credit rating scores.
However, the subprime mortgage lending gathered momentum in the late 90s after Wall Street streamlined the securitization process, and provided a gusher of capital to the non-bank financial companies that operated outside the purview of financial regulators.
With a sharp escalation in the availability of capital, all that subprime lenders had to do was to find borrowers and sell loans back to Wall Street. Bankers worked overtime to mint new securities from these loans and sell for a fee to unsuspecting global investors. Lehman Brothers and Bear Stearns, among others, provided ample capital through their partners or subsidiaries, repackaging these loans to investors and earning hefty fees in the process. The only problem was that the borrowers did not have a clue what they were getting into—something that in many cases was an outright fraud or deception.
In The Monster, award-winning reporter and author Michael W. Hudson narrates a fascinating web of deception and collusion between politicians and subprime lenders while regulators looked the other way. The predatory lending has its origin in the rush to find a customer at any cost in order to sell the loans immediately to investors with very little consequences.
In this remorseless race lenders had only one goal in mind: keep borrowers in debt forever and refinance their customers again and again while financial regulators focused on the “safety and soundness” of lending institutions and not how they treated their customers. During the peak years between 2004 and 2006, subprime lenders were raising and selling more than $700 billion dollars of loans a year before the faulty model collapsed under the heavy weight of mounting loan defaults.
Michael Hudson is a senior editor at at the International Consortium of Investigative Journalists. His two decades of work on mortgage and banking fraud has prompted critics to call him the reporter "who beat the world on subprime abuses," the "guru of all things predatory lending" and "the Woodward/Bernstein of the mortgage crisis."
Previously, he worked previously as a reporter for the Wall Street Journal and the Roanoke (Va.) Times. He has also written for Forbes, the New York Times, the Los Angeles Times, the Washington Post and Mother Jones.
His work has won many honors, including a George Polk Award for magazine reporting, a John Hancock Award for business journalism, an Investigative Reporters and Editors Award, a SPJ/Sigma Delta Chi Award and accolades from the National Press Club, the White House Correspondents' Association, the American Bar Association, New York Press Club and the New York State Society of CPAs.
He edited the award-winning book Merchants of Misery and appeared in the documentary film Maxed Out. His latest book, THE MONSTER: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis, was named 2010 Book of the Year by Baltimore City Paper and called "essential reading for anyone concerned with the mortgage crisis" by Library Journal.
His 2011 series of stories for the Center for Public Integrity, "The Great Mortgage Cover-Up," was selected to appear in Columbia University Press's Best Business Writing 2012.
“Terrifically readable. . . . Hudson gives readers piercing insight into the booze, broads and cocaine that fueled the buccaneers in the mortgage game. . . . Though I thought myself too old to be shocked, the revelations here shocked me. Read it and weep.”
“Buy this book because Mike Hudson is a terrific reporter. Buy it because Hudson tells a vital and underreported story that somehow most every other journalist seemed to miss. But mainly you should buy and devour The Monster because it's a great read, a page turner in the fashion of the best true-crime non-fiction.”
“The Monster reads like chilling and compelling fiction. But the facts are true and the story is all too real. Millions of Americans were ripped off by devious people in pursuit of ever more profit, but that is not the biggest scandal. Amazingly, we have still not fixed the underlying problems of incentives, attitudes, and beliefs in our financial system. If we continue to shy away from real reform, American families are doomed to run repeatedly through some version of this awful cycle.”